What's going on?

Fresh data out on Friday showed that China�s inflation was pretty gentle in September.

What does this mean?

Western countries may well be looking eastward with envy right now, comparing their own whirlwind price increases to China�s softer inflationary breeze. You can�t blame them: consumer prices in the world�s second-biggest economy were up just 2.8% in September compared to the same time last year. Granted, that�s the biggest increase since April 2020, but it�s still below economists� expectations � and a damn sight better than the US�s 8.2%. China�s milder inflation was primarily driven by food prices, propelled by a shortage of pork (a food staple in the country) and temperatures that didn�t suit finicky fruit and veg. So when you really get down to brass tacks, month-on-month core inflation � which strips out volatile prices like food and energy � actually slowed to a mere 0.6%, the weakest it�s been since March 2021.

Why should I care?

Zooming in: China�s inflation is so 2022.
Forget inflation, some analysts reckon that China could be poised for a price-dropping �era of deflation�, with demand on pretty shaky legs at the minute. The main culprit seems to be its floundering property market, which makes up a third of the country�s entire economy: it saw its twelfth-straight month of declining house prices in August � an anniversary that no one wants to celebrate. No wonder, then, that economists expect the government to announce a slew of new support measures.

The bigger picture: Good news, gang.
Those deflation predictions might be bad news for China, but it could be just what the rest of the world needs. China�s the world�s biggest exporter, so any drop in its prices would mean other countries cough up less on imports. With a little luck, that could help take inflation off the boil across the globe.